Naira stability will attract more manufacturers to Nigeria

The founder and Chief Consultant at B. Adedipe Associates Ltd. Dr. Abiodun Adedipe has said that Nigeria is poised to attract more manufacturing companies from across the globe if the Naira becomes stable.

Adedipe stated this on Saturday during the Nairametrics Economic Outlook webinar, which focused on the policies of the Central Bank of Nigeria (CBN) and its impacts on the economy.

Based on recent policies of the CBN, Adedipe said some new manufacturing companies are already setting up plants in the country and more are being expected.

According to him, the manufacturing sector will be the biggest beneficiary of a stable Naira as that will allow the manufacturers to plan their businesses.

Speaking on the specific sectors that will be impacted by the recent monetary policies of the apex bank, Adedipe said:

“My first pick is manufacturing for the good reason that manufacturing thrives when the exchange value of the Naira is stable.

“A stable Naira enables manufacturers to plan and of course, it means that if the rate is also stabilized at let’s say between 1,050 to 1,250, then there’s the possibility for manufacturers to be able to plan so I expect a lot of traction in manufacturing.

“But that also is just by the way, the real fact out there is that we see a lot of new manufacturing entities, setting up factories, in some locations within Nigeria, especially the Southwest, and it is quite interesting.

“So, we expect more of this to happen and a good number of them are also coming from China and of course, Eastern Europe.”

Adedipe said the second sector to be impacted is the trade sector, being the third largest contributor to the country’s GDP. He noted that the sector has also remained very strong in contending with Agriculture and ICT, the three sectors that have been the largest contributors to the GDP over the years.

“Now trade remains the most important because of the consumption habits of Nigerians. High import content of what we consume is unlikely to change overnight. It then means that as the exchange value of the Naira stabilizes, we will see an increase in demand for non-oil products and services,” he said.

“In my firm, every week, we receive inquiries from foreign investors that are looking especially to the Fintech space, and of course, looking at the peculiarities of the Nigerian economy going digital and of course, a population that is useful and also rapidly urbanized. All of these have implications for the ICT sector.”

Dr. Adedipe commended the recent policies of the CBN, saying three of the several policies aimed at fighting inflation and stabilizing the Naira, stood out. ,

According to him, the first outstanding policy was the decision of the MPC concerning the MPR and the CRR for deposit money bank, while the second was the revocation of the license of 4,173 bureau de change and efforts to sanitize the system by mandating the collection of forex buyers information.

He said the third was CBN’s clearance of the inherited backlog of forex obligations, adding that this sends a very strong signal to foreign investors that the country is ready for business.